show all your work for the problems requiring calculations.

1.Define:

a.Price ceiling.

price ceiling is a government regulation that makes it illegal to charge a price higher than a specified level. When a price ceiling is applied to a housing market it is called a rent ceiling.

b.Production quotas

production quota is an upper limit to the quantity of a good that may be produced in a specific period of time.

c.Subsidy

subsidy is a payment made by the government to a producer.

A subsidy increases the supply.

A subsidy results in

an increase in supply,

a fall in price and increase in quantity produced,

an increase in marginal cost,

payment to producers by the government, and

inefficiency from overproduction.

2.Explain the difference between the benefits principle and the ability-to-pay principle in regards to taxation.Give an example of a type of tax that would apply to each principle.